The Product Development Process
Product development is a journey with the ongoing objective of making the most valuable product for your users.
It's important that you continue to make good decisions along the journey to achieve product-market fit.
'Product-market fit' means you've found the right combination of variables to create a product that fits what the market wants, which makes getting and keeping customers much easier.
This article provides a high-level overview of the product development process with the aim of getting a product-market fit.
Good decisions making
Although you may have a good intuition about your customers and what they want, if you are basing your decisions of this alone, you will get it wrong at some point. Humans are not consistently good at making decisions based on assumptions.
Other people in your team will also need to make decisions about product development. It is quite unlikely that any business will have a team that operates off the same core assumptions and intuition, as every person is different.
For these reasons, it's fundamentally important that you and your team use data and customer feedback to make decisions.
“If you haven’t talked to users and you haven’t looked at data, you don’t get to have an opinion about the product. You can have ideas, but you don’t get to make the call” - Emmett Shear, Co-Founder of TwitchTV.
This resource provides a framework to help you approach product development, with a focus on ongoing data collection and feedback loops. This is to help you and your team make the best decisions about creating a valuable product for your customers and your business.
A framework for approaching product development
We've put together a framework for approaching product development. It's designed to break down the high-level intention of your product down into components that can be priorities, built and then optimised to provide value to the overall product offering.
The framework is broken down into the following components, which are explained in more detail below:
- What is the core value behind your business?;
- How does this transfer to key benefits for your customer?
- What are the features of the product that produce these benefits?
- What are the practices and tech that will be used to build, measure and learn from the features?
- What are the metrics that will tell you if your product is valuable enough to your users, and;
- How will you track the financial impact as a result of the product and its features?
1. Your businesses core value
It's important to have a strong foundation for making ongoing decisions about your product and business development. New ideas and opportunities will come up all the time, especially if you are onto a good thing. Although the new shiny things might sound good, often they're distractions from the primary pathway to creating value for your business.
To understand the core drivers, ask yourself the following questions:
- What are the most valuable outcomes for your customers? They will generally tell you.
- What do you need to make work to have a sustainable business model?
The reason the second question is an important consideration when working out your core value is that you need to balance value to customers and value returned to your business. You can give your customers all the benefits in the world, but if this doesn't translate to value for your business, you won't be in business for long.
I worked with a freight marketplace platform startup and the most important outcomes for our customers are: (1) a price that's at or below market rates, (2) freight gets picked off and dropped off on time and (3) the customer spends as little time on freight as possible.
For the business model to work, we needed to be able to prove that we could acquire and retain customers who would send freight at an average price that's 10% higher than the average rate we pay the trucks to do the work. This is the unit economics of the business.
Business development is an ongoing journey of understanding more about your customer's behaviour. It's a process of collecting information to validate assumptions and understand the true reality of the gap you're trying to fill with your product.
Once you have an idea of what your core drivers are, you need ways to measure how successful you are at achieving the desired outcome. This is discussed in '5. Metrics' below.
2. The key benefits for your customers
How does the core value of your business translate to a set of key benefits that make your customers lives better?
One way to understand and articulate your key benefits is by describing how your customers' situation used to be, and how it is now as a result of using your product.
For example, with the freight business, our customers used to pay a higher price because of the incumbent's inabilities to optimise capacity allocation. The company developed technology to track trucks so freight can be sent in the most cost-effective way, which enables the company to pass savings on to its customers. One of the core benefits for customers is cost savings.
Whereas benefits are the outcomes for your customers, features provide the functionality that enables the benefits.
The features are what you are actually building, using software, hardware, ingredients etc.
A good way to understand and articulate your core features is by relating them directly back to your key benefits.
For example, News Feed is a web-feed feature of Facebook which helps users to quickly and easily view the activities of their friends. This functionality is the primary system through which users are exposed to content posted on the network.
4. Build, Measure, Learn
Once you have prioritised what needs to be built first, having a feedback loop to help you make decisions about ongoing development is best practice.
The 'build, measure and learn approach' is the basis of the Lean Startup Methodology and provides a framework for product development.
We have broken this process down for you to understand and implement:
You will need to make some decisions about the best way to build your product.
The decisions you make will depend on your team's expertise, what you know about your customer behaviour and any other unique insights you have on what's most valuable.
For example, you may decide that a web app is better than a native app, or you may choose to create video content over written content, or you may decide that it's better to purchase a proprietary solution or to build it yourself.
If you are not an expert in the area that you are developing a product in, e.g. software, we highly recommend finding someone who is, who can help you to make good decisions.
You should have an understanding of what you need to measure to decide which features are most valuable. This will stem from the core value of your business, and the benefits your product needs to provide to your customers. Once you know this, set up the appropriate system for capturing this data.
Examples of key metrics include the number of active users, load time, specific customer behaviours such as the number of clicks, conversion rates, time on page etc
Tools for tracking customer behaviour. We use google analytics and Hotjar (the free version).
Note - A/B testing is a good way to collect information to make decisions about product development.
Use the insights you gather to make decisions about the ongoing development of your feature. Does it do the job intended, does it work well, could it be made better etc.
5. Key Metrics
The work you're doing in your business should all be optimised towards a set of key metrics that indicate if your product is valuable to your customer.
Having one key metrics that you track religiously will help to make sure that your efforts are aligned to the correct goal, and keep you and your team accountable.
To work out what this one key metric should be, think about the behaviour of your customers that indicates how valuable your product is. This might be the average number of transactions per customer per year, the average number of logins per month, the number of posts per month or Net Promoter Score, as examples.
Speaking to your customers to get direct qualitative feedback is also very valuable, especially in the early stages of product development.
6. Track Revenue
Keep track of your week-on-week and/or your month-on-month revenue so you can see your efforts translate into value for your business. This will make the hard slog feel worthwhile.
Developing a functional, valuable product is no easy feat. People often underestimate how hard it is to turn an idea into a piece of technology, or another form of product, that people get enough value from to continue to use.
Remember, it's a noisy world out there. There are lots of other businesses and products competing for your customer's attention, and wallet share. You need to put the effort in to make sure you are building something your users love.
We hope this guide helps to develop you're thinking in regards to product development.
We do offer software product development services through Mum's Garage if you don't have the capabilities to develop a mobile or web application yourself. Or we can assist you with development strategy through mentorship.